What is Ruffena Venture Debt?
Ruffena Venture Debt is an injection of capital that provides resources to help businesses grow. At the same time, it allows company owners to maintain control and ownership. Ruffena Venture Debt is suitable for businesses that are growing rapidly. It can be used to accelerate growth and get you in the fast lane prior to a key value generating event such as a future equity round, an IPO, or a trade sale. It can be used to part fund an acquisition, a management buyout or an IPO. Venture Debt is secured against the value of the company rather than specific assets.
What is the Difference Between Venture Debt and Venture Capital?
Venture Debt provides financial resource with minimal dilution of the shareholder equity, whereas Venture Capital typically requires substantial dilution to make its return.
Venture Debt providers do not require a board seat. Venture Capital providers typically do.
Venture Debt providers charge interest and require the loan to be repaid according to an agreed schedule. Venture Capital providers require their funds to be repaid on exit or refinancing.
Venture Debt can be quicker to arrange, perhaps within 2 months from initial contact, whereas Venture Capital typically takes between 3 to 6 months or more to arrange.
What are the Advantages Over Venture Capital?
Nominal dilution: typically, we require only small proportion of the total arranged debt in the form of warrants (options) to buy equity in business. As our loan will typically be for a sum much less that the value of your business, and our warrants are 20% of the loan, the proportion of equity we have the right to buy is small.
Quicker approval process: We aim to approve loans within 2 months of initial contact, but as importantly, we reach a decision to proceed more quickly.
We have no role in running your company, unlike most forms of external equity.
Interest costs and arrangement fees are tax deductible.
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What are the Disadvantages of Ruffena Venture Debt?
Interest must be paid on the agreed basis.
The loan must be repaid although this can be structured to meet your cash flow profile.
Your business must be able to support the interest payments and capital repayment of the entire loan sum in an agreed timeframe.
Arrangements must be made to purchase the Warrants at the end of the loan period.
When is Ruffena Venture Debt Suitable?
Venture Debt is suitable for companies who have:
- A robust business model
- achieved a solid base of revenue and a strong pipeline of sales showing growth of 20% per annum plus
- a base revenue of at least £1m
- a well-researched business plan
- systems for providing monthly business management information
- a clear strategy for an equity raises or an exit or some other means of loan repayment
- strong corporate governance including an active Chairman and a balanced board
- A full or part time finance director
What is Our Investment Process?
We have a very simple process that has five stages:
Stage 1: Submission of business plan and key financial forecasts. Initial due diligence.
Stage 2: On site meeting with management team and other principal investors. Detailed discussions with the Financial Director.
Stage 3: Formal offer and term negotiations.
Stage 4: Financial and operational due diligence, including client verification.
Stage 5: Funding approved, and funds transferred.
What Information Should You Prepare?
We require the following information prior to meeting:
- A presentation of the business plan including revenue breakdown by client.
- Last three years accounts.
- The most recent management accounts.
- Monthly financial forecasts for next three years including profit and loss, cash flow, balance sheets.
- A capitalisation table showing equity ownership.
For further information contact:
Richard J Turner
Email: [email protected]